Carphone Warehouse 2007 Annual Report Download - page 9

Highlights and Strategy Business Review Governance Financial Statements
Looking forward, we plan to marry physical
expansion with an increased focus on
productivity from our existing estate
allowing seamless connectivity across multiple
platforms and locations. They want their computer to
talk to their television, and to be able to control both
from their mobile device while away from home.
We sell most of the “nuts and bolts” today – mobile
contracts, high-speed data cards, broadband, hand-
held e-mail devices; some of these are our own
products, most of them are third party. Our job will be
to set our customers up with the most appropriate
suite of services and make sure that it all works. The
stores, as ever, will be the primary point of distribution,
but Geek Squad will become an integral part of our
overall value proposition.
Geek Squad, launched with our partners Best Buy, is
a home technology troubleshooting service, developed
to address the increasing technological complexity of
people’s lives. It will allow us to add significant value
to customers by making technology work for them,
and to our network partners by tying their individual
products and services into a unified package.
To support the broadening of our proposition,
which will include the sale of an increasing range
of non-cellular communications products, we are
embarking on a programme of refits and relocations
across a range of our larger stores in prime locations.
We will update investors with progress as our new
strategy evolves.
Becoming the leading alternative fixed line provider
in the UK
Nearly five years ago, when we acquired Opal Telecom
in November 2002, we set ourselves the ambitious goal
of becoming the number one alternative fixed line
telecoms provider in the UK. We believed that the
combination of high consumer prices, a high incumbent
market share, meaningful regulatory change and our
own unique distribution network was a powerful one;
the network infrastructure and telco know-how we
acquired with Opal completed the jigsaw.
Today, through a combination of strong organic growth
and judicious acquisitions, we have over 10% of the
residential telephony market and approximately 16%
of the broadband market. After the very significant
strides we have made this year, our bold objective
is now clearly within reach.
During the year we made three notable steps forward
and one step back. We announced in November 2005
our plans to invest in local loop unbundling (“LLU”) –
a process in which we install our own exchange
year’s success with the exclusive pink Motorola V3,
this was a particularly creditable performance achieved
across a range of unique handsets rather than from a
single blockbuster product.
During the year we entered our first new market for
over seven years through our link-up in the US with
Best Buy. After a successful trial we are excited about
the rapid roll-out plans and the opportunity to
introduce US consumers to the independent mobile
retail model. Best Buy is the ideal partner and the
relationship between us is highly complementary.
Looking forward, we plan to marry physical expansion
with an increased focus on productivity from our
existing estate. Excluding the US, we see opportunities
to open a further 200-250 stores a year for the next
three years. Just as importantly, we are revisiting
existing sites and assessing the need for additional
headcount and points of sale as we seek to convert
more of our footfall into business. We also have the
opportunity to re-site stores in many major centres
where we have outgrown our current footprint.
Maximising customer lifetime value
We have been focused on maximising customer
lifetime value for almost as long as Carphone
Warehouse has existed. Generating enhanced
value for our network partners and loyalty from our
customers comes not just from providing high quality
consultancy at the point of sale, but supporting
customers through the product life-cycle.
Over the years we have been very successful at
introducing new services into our retail offering, with
our Insurance and Fixed Line services being the
most obvious and successful. However, the quality
of our customer interaction is often demonstrated
in less quantifiable ways – for example, through our
investment in new store formats or our commitment
to live product demonstrations. What all of these
developments have in common, though, is that they
meet the changing needs of the marketplace and
reflect Carphone Warehouse’s ongoing ability to renew
its business model in response to the prevailing
opportunities and risks.
Today, as wireless technologies become more
pervasive and our customers increasingly want
more from us than choice, availability and advice on
a simple mobile contract, we are beginning to adapt
our proposition once more. Customers – and our
network partners – will want integrated solutions,
5
10%
market share of
mobile phone market
3.5m
Broadband customers
by March 2010
1m
Virgin Mobile France
customers by March 2009
www.cpwplc.com
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